I don't see where you are answering the question regarding the Settlement Reason.

Taking a loan is how they are paying for something; that doesn't change the "thing" (tangible or not) that was purchased or being paid for. The Loan isn't the Fees; it's the Money for the banking part.

Without more details, no one can help you with specifics. In general, you described it as a "decade" long settlement. Without knowing what that means or is, the point is the Fees incurred are not the Loan or Settlement Terms. The Fees might be deductible or not, based on what the suit related to. The Terms are a fulfillment process, for the loser. None of this paragraph is Tax Treatment of the fees.